Company Name: Burlington Northern Santa Fe Corp.
Public Availability Date: January 30, 2006
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 20, 2005
By Messenger
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: Burlington Northern Santa Fe CorporationShareholder Proposal Submitted by
Emil Rossi
Dear Sir or Madam:
On behalf of Burlington Northern Santa Fe Corporation, and pursuant to Rule
14a-8(j) under the Securities Exchange Act of 1934, I hereby request
confirmation that the Staff of the Securities and Exchange Commission will not
recommend enforcement action if, in reliance on certain provisions of Rule
14a-8, we exclude a proposal submitted by Emil Rossi from our proxy materials
for our 2006 annual meeting of shareholders, which we expect to file in
definitive form on or about March 13, 2006.
On October 12, 2005, we received a shareholder proposal from Mr. Rossi for
inclusion in our 2006 annual meeting proxy materials. The proposal (which,
together with the accompanying statement in support, is attached as Exhibit A),
reads as follows:
Independent Board Chairman
RESOLVED: Stockholders request that our Board of Directors change our governing
documents to require that the Chairman of our Board serve in that capacity only
and have no management duties, titles, or responsibilities. This proposal gives
our company an opportunity to cure our Chairman's loss of independence should it
occur after this proposal is adopted.
Pursuant to Rule 14a-8(j), I have enclosed six copies of the proposal and this
letter, which sets forth the grounds upon which we deem omission of the proposal
to be proper. For your convenience, we have enclosed copies of the no-action
letters referred to herein (although we have not included all of the
supplemental information included in the file). Pursuant to Rule 14a-8(j), a
copy of this letter is being sent to the proponent to notify him of our
intention to omit the proposal from our 2006 annual meeting proxy materials.
We believe that the proposal may be properly omitted from our proxy materials
pursuant to Rule 14a-8 for the reasons set forth below.
I. The Proposal May Be Properly Omitted under Rule 14a-8(i)(6) as the Company
Lacks the Power or Authority to Implement it
Recently, in Staff Legal Bulletin No. 14C (June 28, 2005), the Staff clarified
its analysis of no-action requests involving director independence. The Bulletin
states that "when a proposal is drafted in a manner that would require a
director to maintain his or her independence at all times, we permit the company
to exclude the proposal under rule 14a-8(i)(6) on the basis that the proposal
does not provide the board with an opportunity or mechanism to cure a violation
of the standard requested in the proposal." The Bulletin cites Allied Waste
Industries, Inc. (March 21, 2005) as an example of a proposal that was properly
excluded. The proposal at issue in Allied states, in relevant part: "The
shareholders ... urge the Board of Directors (the "Board") to amend the by-laws
to require that an independent director who has not served as the chief
executive of the Company serve as Board Chair." The Staff found that this
proposal could be excluded because it did not include a mechanism to cure a
violation of the proposed independence standard.
In several other recent letters, the Staff used this same reasoning in allowing
proposals to be excluded. For example, see Exxon Mobil Corporation (March 13,
2005) (Exxon was permitted to exclude a proposal asking that the by-laws be
amended so that an independent director will serve as Chairman and that the
positions of Chairman and CEO be split); Intel Corp. (February 7, 2005) (Intel
was permitted to exclude a proposal requesting an amendment to the by-laws that
would require an independent director to serve as Chairman); and Cintas Corp.
(August 27, 2004) (same).
Mr. Rossi's proposal, while quite confusing, raises issues substantially similar
to those discussed in Allied, Exxon Mobil, Intel and Cintas. Although the text
of Mr. Rossi's proposal does not explicitly demand that the Chairman be
"independent," Mr. Rossi insists that the title of his proposal "Independent
Board Chairman" is part of the argument in favor of the proposal. Mr. Rossi
requests that the individual who serves as Chairman of the Board not be
permitted to have any management responsibilities and then asserts that "[t]his
proposal gives our company an opportunity to cure our Chairman's loss of
independence should it occur after this proposal is adopted," without explaining
how this is to happen. He then, in his supporting statement, claims that his
proposal will "make our Board more accountable by adopting an independent board
chairman requirement."
It is unclear how the proposal provides an opportunity to cure any loss of
independence. There is no equivocal language such as that in the Merck & Co.,
Inc. proposal (December 29, 2004) which requested that the "Directors establish
a policy of separating the roles of Board Chair and Chief Executive Officer
(CEO) whenever possible...." (emphasis added). There is no language similar to
that in The Walt Disney Co. proposal (November 24, 2004) which asked that the
Chairman always be an independent member of the Board "except in explicitly
spelled out, extraordinary circumstances." In those two cases, the staff was
unable to concur that the proposals could be excluded because the proposals
contained exceptions to the requirement that the Chairman be independent.
Although the conclusory language in Mr. Rossi's proposal uses the word "cure,"
it is easily distinguishable from Merck and Disney.
Mr. Rossi implies that his proposal will result in the Chairman being
independent at all times. It does not allow for any exceptions. The last
sentence of the proposal is meaningless and does not meet the Staff's
requirement that a proposal provide the board with an opportunity or mechanism
to cure a violation of the independence standard requested by the proposal.
BNSF's board of directors does not have the power to ensure that the Chairman
retains his or her independence at all times. For this reason, the Company
believes that the proposal is excludable pursuant to Rule 14a-8(i)(6).
II. Part of the Supporting Statement May Be Properly Omitted under Rule
14a-8(i)(3) Because it is Materially False and Misleading
In Staff Legal Bulletin No. 14B (September 15, 2004), the Staff sharply limited
the number of situations that a proposal could be omitted or modified under Rule
14a-8(i)(3). However, modification or exclusion may still be permitted if "the
company demonstrates objectively that a factual statement is materially false or
misleading."
As explained above, we believe that Mr. Rossi's proposal improperly demands that
BNSF's Chairman must be "independent." If, however, the Staff finds that the
proposal does not explicitly demand independence, but simply requests that the
positions of Chairman and CEO be filled by two different people, the proposal
and supporting statement are materially misleading. Mr. Rossi uses some form of
the word "independent" seven times in his proposal and supporting statement. He
titled his proposal "Independent Board Chairman," and claims that shareholders
will be "adopting an independent board chairman requirement" if they support his
proposal. If independence is not actually what he is requesting, the
shareholders will be confused, as we were. If his proposal is included in our
proxy materials, all references to "independence" should be omitted from the
proposal and supporting statement (unless Mr. Rossi actually is requesting a
vote on whether BNSF should have an "independent" Chairman, in which case the
proposal should be excluded as explained in Section I above).
Mr. Rossi's supporting statement also states that "[t]wenty (20) shareholder
proposals on this topic achieved an impressive 54% average yes-vote in 2005."
Because this sentence is not followed by any sort of a citation or an
explanation, it is materially misleading. A shareholder reading this statement
could even think that it was BNSF's shareholders that had voted 20 times on a
similar proposal. There are no details that would allow the shareholders to
evaluate the language of these 20 other proposals, the size of the other
companies, or the relevance of any comparison. The Staff permitted a similar
statement to be omitted in PACCAR Inc. (January 25, 2004) (statement that "[t]he
poison pill vote topic won an overall 60% yes-vote at 79 companies" omitted as
irrelevant under Rule 14a-8(i)(3)). Random statistics about dissimilar companies
can only serve to confuse the shareholders.
For these reasons, the Company believes that the statements are materially
misleading and should be omitted pursuant to Rule 14a-8(i)(3).
III. Conclusion
For the foregoing reasons, I request your confirmation that the Staff will not
recommend any enforcement action to the Commission if Mr. Rossi's proposal is
omitted from our 2006 annual meeting proxy materials or, in the alternative,
that we may omit the portions of his supporting statement described above.
To the extent that the reasons set forth in this letter are based on matters of
law, this letter also constitutes an opinion of counsel pursuant to Rule
14a-8(j)(2)(iii). If the Staff has any questions or has formulated a response to
my request, please contact Jeffrey T. Williams by telephone at (817) 352-3466 or
by facsimile at (817) 352-2397.
Please acknowledge receipt of this letter and the enclosures by date-stamping
the enclosed copy of this letter and returning it to the waiting messenger.
Very truly yours,
/s/
Jeffrey R. Moreland
Executive Vice President Law & Government
Affairs and Secretary
Enclosures
cc: John Chevedden
Emil Rossi
[INQUIRY LETTER]
Emil Rossi
P.O. Box 249
Boonville, CA 95415
Mr. Matthew K. Rose
Chairman
Burlington Northem Santa Fe Corporation (BNI)
2650 Lou Menk Dr Fl 2
Fort Worth TX 76131
Dear Mr. Rose,
This Rule 14a-8 proposal is respectfully submitted for the 2006 annual
shareholder meeting to support the long-term performance of our company. Rule
14a-8 requirements are intended to be met including ownership of the required
stock value until after the date of the applicable shareholder meeting. This
submitted format, with the shareholder-supplied emphasis, is intended to be used
for definitive proxy publication.
This is the proxy for Mr. John Chevedden and/or his designce to act on my behalf
in shareholder matters, including this shareholder proposal for the forthcoming
shareholder meeting before, during and after the forthcoming shareholder
meeting. Please direct all future communication to Mr. John Chevedden at:
PH: 310-371-7872
2215 Nelson Ave., No. 205
Redondo Beach, CA 90278
Your consideration and the consideration of the Board of Directors is
appreciated.
Sincerely,
/s/
cc: Jeffrey R. Moreland
Corporate Secretary
PH: 800 795-2673
FX: 817 352-7171
FX: 817-333-2377
[APPENDIX]
[October 12, 2005]
3Independent Board Chairman
RESOLVED: Stockholders request that our Board of Directors change our governing
documents to require that the Chairman of our Board serve in that capacity only
and have no management duties, titles, or responsibilities. This proposal gives
our company an opportunity to cure our Chairman's loss of independence should it
occur after this proposal is adopted.
Emil Rossi, P.O. Box 249, Boonville, Calif. 95415 submitted this proposal.
When a person acts both as a company's Chairman and its CEO, a vital separation
of power is eliminatedand we as the owners of our company are deprived of both
a crucial protection against conflicts of interest and also of a clear and
direct channel of communication to our company through our Chairman.
54% Yes-Vote
Twenty (20) shareholder proposals on this topic achieved an impressive 54%
average yes-vote in 2005. The Council of Institutional Investors www.cii.org,
whose members have $3 trillion invested, recommends adoption of this proposal
topic.
Progress Begins with One Step
It is important to take one step forward in our corporate governance and adopt
the above RESOLVED statement since our 2005 governance standards were not
impeccable. For instance in 2005 it was reported (and certain concerns are
noted):
We had no Independent Chairman or Lead DirectorIndependent oversight concern.
Cumulative voting was not allowed.
Vilma Martinez was designated a problem director by The Corporate Library
(TCL), an independent investment rescarch firm in Portland, Maine. Ms. Martinez
chaired the director nomination committee at Anheuser-Busch, which received a
Board Composition grade of "F" by TCL.
5 of our outside directors reported non-director relationships with our
company that investors may wish to examine more closely to determine their
actual degree of independence.
Our full Board met only 6-times in a full year.
Our key Audit Committee met only 6-times in a full year.
The chairman of our Audit Committee had 25-years director tenureIndependence
concern.
With the above room for improvement it is important to take one-step forward and
make our Board more accountable by adopting an Independent board chairman
requirement.
Moreover
It is well to remember that at Enron, WorldCom, Tyco, and other legends of mis-management
and/or corruption, the Chairman also served as CEO. And these dual roles helped
those individuals to achieve virtually total control.
When a Chairman runs a company as Chairman and CEO, the Information given to
directors may or may not be accurate. If a CEO wants to cover up improprieties
and directors disagree, with whom do they lodge complaints? The Chairman?
Notes:
The above format is the format submitted and intended for publication.
The company is requested to assign a proposal number (represented by "3" above)
based on the chronological order in which proposals are submitted. The requested
designation of "3" or higher number allows for ratification of auditors to be
item 2.
This proposal is believed to conform with Staff Legal Bulletin No. 14B (CF).
September 15, 2004 including:
Accordingly, going forward, we believe that it would not be appropriate for
companies to exclude supporting statement language and/or an entire proposal in
reliance on rule 14a-8(i)(3) in the following circumstances:
the company objects to factual assertions because they are not supported;
the company objects to factual assertions that, while not materially false or
misleading, may be disputed or countered;
the company objects to factual assertions because those assertions may be
interpreted by shareholders in a manner that is unfavorable to the company, its
directors, or its officers; and/or
the company objects to statements because they represent the opinion of the
shareholder proponent or a referenced source, but the statements are not
identified specifically as such.
Please note that the title of the proposal is part of the argument in favor of
the proposal. In the interest of clarity and to avoid confusion the title of
this and each other ballot item is requested to be consistent throughout the
proxy materials.
Please advise if there is any typographical question.
Stock will be held until after the annual meeting. Verification of stock
ownership will be forwarded.
[INQUIRY LETTER]
#2 Re Burlington Northern Santa Fe Corporation (BNI) No-Action Request Emil
Rossi
JOHN CHEVEDDEN
2215 Nelson Avenue, No. 205
Redondo Beach, CA 90278
310-371-7872
January 23, 2006
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Burlington Northern Santa Fe Corporation (BNI)
#2 Shareholder Position on Company No-Action Request Rule 14a-8 Proposal:
Independent Board Chairman
Shareholder: Emil Rossi
Ladies and Gentlemen:
This adds to the December 24, 2005 initial response (unanswered) to the
Burlington Northern December 20, 2005 no action request.
In General Electric Company (January 10, 2006) and Newmont Mining corporation
(January 13, 2006) these respective companies did not receive concurrence for
proposals with essentially the same text:
BNI
3 Independent Board Chairman
RESOLVED: Stockholders request that our Board of Directors change our governing
documents to require that the Chairman of our Board serve in that capacity only
and have no management duties, titles, or responsibilities. This proposal gives
our company an opportunity to cure our Chairman's loss of independence should it
occur after this proposal is adopted.
GE
3 Independent Board Chairman
RESOLVED: Stockholders request that our Board of Directors change our governing
documents (Charter or Bylaws if practicable) to require that the Chairman of our
Board serve in that capacity only and have no management duties, titles, or
responsibilities. This proposal gives our company an opportunity to cure our
Chairman's loss of independence should it occur after this proposal is adopted.
NEM
3 Independent Board Chairman
RESOLVED: Stockholders request that our Board of Directors change our governing
documents to require that the Chairman of our Board serve in that capacity only
and have no management duties, titles, or responsibilities. This proposal gives
our company an opportunity to cure our Chairman's loss of independence should it
occur after this proposal is adopted.
For the above reasons and the December 24, 2005 reasons it is respectfully
requested that concurrence not be granted to the company. It is also
respectfully requested that the shareholder have the last opportunity to submit
material since the company had the first opportunity.
Sincerely,
John Chevedden
cc:
Emil Rossi
Jeffrey Moreland<jeffrey.moreland@bnsf.com>
[INQUIRY LETTER]
Re Northern Santa Fe Corporation (BNI) No-Action Request Emil Rossi
JOHN CHEVEDDEN
2215 Nelson Avenue, No. 205
Redondo Beach, CA 90278
310-371-7872
December 24, 2005
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Burlington Northern Santa Fe Corporation (BNI) Shareholder Position on Company
No-Action Request Rule 14a-8 Proposal: Independent Board Chairman Shareholder:
Emil Rossi
Ladies and Gentlemen:
This is an initial response to the Burlington Northern 3.5-page no action
request of December 20, 2005.
The text of the proposal states:
"3 Independent Board Chairman
"RESOLVED: Stockholders request that our Board of Directors change our governing
documents to require that the Chairman of our Board serve in that capacity only
and have no management duties, titles, or responsibilities. This proposal gives
our company an opportunity to cure our Chairman's loss of independence should it
occur after this proposal is adopted."
The proposal clearly states: "This proposal gives our company an opportunity to
cure our Chairman's loss of independence should it occur after this proposal is
adopted."
SLB 14C states:
"In contrast, if the proposal does not require a director to maintain
independence at all times or contains language permitting the company to cure a
director's loss of independence, any such loss of independence would not result
in an automatic violation of the standard in the proposal and we, therefore, do
not permit the company to exclude the proposal under rule 14a-8(i)(6)."
Thus this proposal "contains language permitting the company to cure a
director's loss of independence" by stating, "This proposal gives our company an
opportunity to cure our Chairman's loss of independence should it occur after
this proposal is adopted."
SLB 14C does not state that the cited Walt Disney Company and Merck & Co.
examples point out the only words to be used in a proposal to meet the explicit
SLB text, which precedes these two examples, "If the proposal does not require a
director to maintain independence at all times or contains language permitting
the company to cure a director's loss of independence S[caron accent on letter
s] we, therefore, do not permit the company to exclude the proposal under rule
14a-8(i)(6)."
The company does not claim that this "Resolved" text is unrelated to
independence: "... the Chairman of our Board serve in that capacity only and
have no management duties, titles, or responsibilities". "No management duties,
titles, or responsibilities" is clearly consistent with some level of
independence. Therefore why does the company believe that all reference to
independence must be omitted from the proposal.
For the above reasons it is respectfully requested that concurrence not be
granted to the company. It is also respectfully requested that there be an
opportunity to submit additional material in support of the inclusion of the
rule 14a-8 proposal. Also that the shareholder have the last opportunity to
submit material since the company had the first opportunity.
Sincerely,
John Chevedden
cc:
Emil Rossi
Jeffrey Moreland
jeffrey.moreland@bnsf.com
[STAFF REPLY LETTER]
January 30, 2006
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Burlington Northern Santa Fe Corporation Incoming letter dated December 20,
2005
The proposal requests that the board change the company's governing documents to
require that the chairman serve in that capacity only and have no management
duties, titles, or responsibilities.
We are unable to concur with your view that BNSF may exclude portions of the
proposal or supporting statement under rule 14a-8(i)(3). Accordingly, we do not
believe that BNSF may omit portions of the proposal or supporting statement from
its proxy materials in reliance on rule 14a-8(i)(3).
We are unable to concur in your view that BNSF may exclude the proposal under
rule 14a-8(i)(6). Accordingly, we do not believe that BNSF may omit the proposal
from its proxy materials in reliance on rule 14a-8(i)(6).
Sincerely,
/s/
Mark F. Vilardo
Special Counsel
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